There is no shortage of triggers to detonate a precipitous fall in stock market values: any preemptive strike in Iran, rejection of austerity measures by electorates in the Euro zone, uncertain political outcomes and possible meltdown of the Euro, economic slow – down in China and even, perhaps, a Chinese miscalculation of American resolve in the South China Sea to keep sea lanes open, Congressional impasse in budget negotiations, a fundamentalist takeover of Egypt, terrorist attacks…the list goes on and on.
Yet, there is something emerging in the American economy that can fuel growth for the next ten years and beyond that is acting as a massive counterbalance and game changer: Shale Gas. Over the next ten years, the U.S. will experience a renaissance in manufacturing driven by low energy costs and investment that can lead to an export driven America in energy and manufacturing and the creation of jobs – millions of them. And lest, we forget, the same dynamics are at play in Canada. For many an investor, this is alien turf.
Investment time horizons for each of us are deeply personal. Yet, it might behoove those whose only point of reference has been the internet and an America that imports almost everything it consumes from China to take another look at the basics – new manufacturing capacity and its impact on U.S. economic growth both here at home and our near abroad – Canada and Mexico. Fortunately, MarketGrader’s coverage of stocks extends to Canada and eventually will encompass Mexico too.
For the moment, this ‘market’ seesaw can go either way. However, sooner or later, the impact of cheap gas will have its say and be reflected in the financials and market pricing of all the companies MarketGrader covers. With this in mind, it might not hurt to start looking at the basics that made America what it used to be – an export driven economy with hope for the future.

Amid an uncertain economic climate investors should be looking not only for companies that are able to survive an economic downturn but also for those that might actually benefit from taking market share from weaker rivals that may be too busy defending their turf or simply focused on surviving a weak economy. A good place to find these companies is MarketGrader’s Cash Kings idea list, one of 22 unique lists published daily for our subscribers.  In order to qualify as a ‘Cash King,’ a company must have an overall ‘Buy’ rating from MarketGrader, a Cash Flow overall grade of at least A- and a minimum of $1 billion in cash on hand. Our current list, available for free to all visitors as the Idea List of the Week, includes a total of 113 companies. 22 of them have at least $10 billion in cash on hand and 36 have a market cap of at least $50 billion; this is clearly a list of mostly large cap companies, with the smallest one, BBVA Banco Frances SA Buenos Aires (BFR), having a capitalization of $1.8 billion. And very telling perhaps of investor preference for safer, solid companies amid the recent market downturn, only five of the companies on the list have a Negative Sentiment rating, while 30 have a Neutral Sentiment rating and 78 have a Positive Sentiment rating.

The following are a few of the highlights of the top ten Cash Kings on MarketGrader.com:

1. Intel Corp (NASD: INTC)

Intel, which was recently the highest overall graded company in all of MarketGrader, has only $2.14 billion in total debt, compared to $11.90 billion in cash on hand. The company received an A+ grade in 4 of the 6 indicators that make up our Cash Flow category: EBITDA Margin, Debt/Cash Flow Ratio, Interest Coverage Capacity and Economic Value. Intel has an overall grade of 91.8 (out of 100).

2. Cliff’s Natural Resources Inc. (NYSE: CLF)

Cliff’s Natural Resources, with an overall grade of 89.0, saw its cash flow grow considerably in its latest quarter to $106.90 million, a 60.27% increase from $66.70 million reported in the year earlier period. The company’s liquidity is not only remarkable but the current amount of debt it carries relative to the cash flow it generates from its operations is even lower now than it was a year ago. It received an A+ grade in 3 of our 6 Cash Flow indicators: Cash Flow Growth, Debt/Cash Flow Ratio and Retention Rate.

3. Apple Inc. (NASD: AAPL)

Apple is truly a cash machine, generating almost $6 billion in free cash flow per quarter and more than $23 billion over the last 12 months.  Its cash flow grew considerably in its latest quarter to $6.22 billion, a 166.91% increase from $2.33 billion reported in the year earlier period. When compared to the 96.25% increase in cash flow in the last twelve months it seems like the rate of growth is accelerating, which could have a very positive impact on earnings growth in coming quarters. The company clearly has very strong liquidity having no debt to finance and $29.23 billion in cash on hand. This affords it significant flexibility to take on debt if it wanted to pursue new growth opportunities such as an acquisition. Apple received an A+ in 5 of 6 Cash Flow indicators: Cash Flow Growth, Debt/cash flow Ratio, Interest Covering Capacity, Economic Value, and Retention Rate. It has an overall grade of 88.0.

The following companies round out our top ten Cash Kings:

4. Research In Motion LTD. (NASD: RIMM)- Overall Grade: 87.6

5. Vale SA (NYSE: VALE)- Overall Grade: 87.2

6. Microsoft (NASD: MSFT)- Overall Grade: 87.1

7. Freeport-Mcmoran Copper and Gold (NYSE: FCX)- Overall Grade: 86.0

8. Altera Corp (NASD: ALTR)- Overall Grade: 86.0

9. Lam Research Corp (NASD: LRCX)- Overall Grade: 84.9

10.  Annaly Capital Management (NYSE: NLY)- Overall Grade: 84.4

For the complete list of all 113 “Cash Kings” and their fundamental analysis, please click here.

Following the Federal Reserve’s announcement last Friday that some banks may be held to higher capital requirements that correspond with the bank’s importance to the financial system (MarketWatch), investors have been bearish on financial stocks, especially large cap banks. The impact of this announcement is evident in companies such as Citigroup (C), which dropped 4.5% on the trading day after this announcement.

Year to date the S&P 500 Financial Index, which underlies the popular XLF ETF is down 6.6% while MG Financials is up 2.5% in the same period. These are price-only returns of the indexes and exclude dividends or the costs of owning a fund or ETF. Over a longer period of time, MG Financials’ out performance is even more remarkable. Based on three-year price only cumulative returns, as of yesterday’s close, MG Financials has outperformed the S&P 500 Financials Index by more than 38 percentage points.

3-Year Price-Only Cumulative Returns:

MarketGrader Financials Index:   +2.53%

S&P 500 Financials Index:    -35.89%

While some of this performance can be attributed to the fact that MG Financials is equally weighted, and thus not overly exposed to the mega-cap banks that crashed during the 2008 financial crisis, a good deal of the performance is also owed to sound stock selection and a disciplined rebalance approach. A few examples of its constituents appear below.

How is the index constructed?

The MG Financials Index consists of the 40 highest rated financial stocks (based on fundamental analysis) on MarketGrader.com and is rebalanced quarterly, with the last shuffle having taken place at the end of May.

As of June 7, 2011, the 3 highest rated stocks on the MG Financial Index were:

Anally Capital Management (NLY)- rated 84.4/100

Chimera Investment Group (CIM)- rated 81.9/100

Ares Capital (ARCC)- rated 80/100

The 3 stocks in the index with the largest YTD gains are:

Encore Capital (ECPG)- up 37.87%

Cash America International (CSH)- up 34.23%

Credit Acceptance Corp (CACC)- up 21.91%

When using ETFGrader to compare the MG Financials to an ETF that tracks the returns of the S&P 500 Financial Index, such as SPDR Financial Select Fund (XLF) we can see how these gains are possible. The MG Financial Index has an average rating of 68.23, whereas XLF has an average rating of 52.9. This reflects the fact that the MarketGrader Index consists of fundamentally stronger companies, which is reflected in the returns of the two indexes.

Hhgregg Inc. (HGG) has been named by MarketGrader.com as the stock that tops its “Movers and Shakers” list.

The MarketGrader.com Movers & Shakers list is comprised of ‘Buy’ or ‘Hold’ rated stocks with the most four-week positive momentum according to their Sentiment rating. These are stocks for which market sentiment has been improving recently at an accelerating pace.

HGG’s Sentiment score has improved more than 18% in the last four weeks, indicating the stock is gaining market momentum. It’s current Sentiment rating of ‘Neutral’ is based on an overall score of 4.9 out of 10, while a month ago the score was 2.6, with a ‘Negative’ rating.

Further analysis shows that HGGregg’s fundamentals are also sound. The company booked $2.08 billion in total revenue during the 12-month period ended last quarter, 65.33% higher than the equivalent period ended three years ago, when total revenue was $1.26 billion. Considering the strength of its fundamentals, shares of HGG are attractively priced at $14.38, 12 times trailing earnings and 11 times forward 12 month earnings per share. The overall Value grade assigned by MarketGrader to HGG is A-.